Madigan goes after mortgage predators

Lawsuit says 2 firms duped homeowners

January 31, 2006|By David Jackson, Tribune staff reporter.

Calling mortgage fraud "a cancer that is eating away at our neighborhoods," Illinois Atty. Gen. Lisa Madigan announced two lawsuits Monday against companies that she accused of taking homes and money from vulnerable victims.

Madigan charged that a Chicago company, Advantage Mortgage Consulting, promised to help two South Side homeowners with their financial troubles but instead duped them out of property worth $469,000.

The attorney general also filed suit against a North Carolina company, HomeSavers USA Inc., and its CEO, David Moakler, saying that they charged between $350 and $900 for helping to negotiate with lenders, but performed few, if any, services.

The lawsuits are the latest moves in Madigan's campaign to battle mortgage fraud, a growing pattern of crimes that cheats lenders, robs vulnerable people of their homes and drags down whole neighborhoods.

Flanked at a news conference by more than a dozen consumer activists, state lawmakers and fraud victims, Madigan cited a recent Tribune series on mortgage fraud as evidence that state government must act now to stem the problem.

She also promoted a previously announced legislative package that would fight a version of mortgage crimes known as "bailout" or "rescue" fraud.

In these schemes, as detailed in a Tribune investigation Sunday, firms promise help to homeowners in financial trouble and use that entree to gather the information or legal leverage needed to take control of their homes.

Madigan introduced a woman Monday who she said had fallen prey to just such a scheme.

Tangie Chaffin, a single mother who works as a data entry clerk for the Chicago Police Department, said when she fell behind in her $650-a-month mortgage payments, she sought help from Advantage, eventually giving the company power of attorney and the deed to her home.

"I found the locks on my doors changed and my personal belongings set out in the back of the yard," Chaffin said. "I was horrified."

Firm did nothing wrong

Attorney Lawrence A. Gold, who represents Advantage and an affiliated company also named as a defendant, Platinum Investment Group LLC, said in an interview Monday that neither company did anything wrong in the cases cited by Madigan.

"After reviewing the allegations, we are confident that our client will be fully vindicated," Gold said.

Officials from HomeSavers did not return a call for comment Monday.

At Monday's news conference, Madigan also presented Martha Balderas, who has lived with her husband and three children in a modest South Side ranch home since 1996.

The two-income family fell behind in their mortgage payments when Martha had medical problems and turned to Advantage for help.

"Before we knew it, we were signing blank documents," Martha Balderas said. They, too, gave the company a power of attorney and deed, Madigan said.

"We tried to cancel this transaction the next day, but we were told it was too late," Balderas said. Now the family faces eviction.

An Advantage executive "kept telling us, `Trust me--we can help you stay in your home,'" Balderas said. "He had the face of someone I could trust, and everything he told us was something I wanted to hear."

Bailout operators defend their businesses, saying they are trying to give desperate people a last chance to save their homes.

`Enticing promises'

But Madigan said Monday, "These so-called rescuers offer very enticing promises, but they are con artists pushing people further into debt."

A legislative package, sponsored by state Sen. Jacqueline Collins (D-Chicago) and state Rep. Marlow Colvin (D-Chicago), would force bailout consultants to detail their services in a written contract and allow homeowners to cancel any time before all services have been performed.

The bills were introduced in Springfield earlier this month, for consideration this spring.

"I hope this is just the first step in halting these unscrupulous and reprehensible fraud practices," said Collins.

Collins said she also intended to examine the staffing levels at government agencies that regulate the real estate industry.

"Mortgage fraud is on the increase, so staffing issues have to be addressed," she said.

Madigan was also joined at the news conference by state Sen. Donne Trotter (D-Chicago), William McNary of Citizen Action Illinois, Daniel Lindsey of the Legal Assistance Foundation of Metropolitan Chicago and representatives of the Southwest Organizing Project, Voices for Illinois Children and other groups.

Trotter called the pending legislation a great first step. But, he added, "We have more steps to take."

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ON THE INTERNET Read the full mortgage fraud investigative series online at chicagotribune.com/mortgage